Lloyds Banking Group plc (LON:LLOY) today announced its interim results for the 3 months ended 31st March 2017.
Strong underlying performance with significant improvement in statutory profit and returns.
· Increase in underlying profit to £2.1 billion with an underlying return on tangible equity of 15.1 per cent
· Positive operating jaws while credit quality remains strong with asset quality ratio of 12 basis points
· Statutory profit before tax increased to £1.3 billion; statutory return on tangible equity of 8.8 per cent
· Strong balance sheet maintained with CET1 ratio of 14.5 per cent (pre dividend accrual)
· Tangible net assets per share increased to 56.5 pence driven by strong underlying profit
Our differentiated UK focused business model continues to deliver.
· Simple, efficient and low risk business model providing competitive advantage
· Strong capital generation of 0.7 percentage points
· UK government shareholding now below 2 per cent
On track to deliver the Group financial targets for 2017 with longer term guidance maintained.
· Net interest margin for the year now expected to be close to 2.80 per cent (pre MBNA)
· Expect open book mortgage balances to stabilise and then grow to close the year in line with 31 December 2016
· Asset quality ratio for the year now expected to be inside existing 25 basis points guidance (pre MBNA)
· Expect 2017 capital generation to be at the top end of the 170-200 basis points ongoing guidance range
· Continue to target a cost:income ratio of around 45 per cent exiting 2019 with reductions every year
· Expect to generate a statutory return on tangible equity of between 13.5 and 15.0 per cent in 2019
GROUP CHIEF EXECUTIVE’S STATEMENT
In the first three months of this year we have delivered strong financial performance with increased underlying profit, a significant improvement in statutory profit and returns, and strong capital generation. These results continue to demonstrate the strength of our customer focused, simple and low risk business model and our ability to respond to a challenging operating environment.
The UK economy continues to benefit from low unemployment and reduced levels of indebtedness, and asset quality remains strong and is stable across the portfolio. We remain committed to supporting the people, businesses and communities in the UK through our Helping Britain Prosper Plan and putting customers first. As announced earlier this month, we are determined that the victims of HBOS Reading are fairly, swiftly and appropriately compensated and we have set aside a provision of £100 million in our first quarter results.
We continue to make good progress against our strategic priorities of creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth; and we remain on track to deliver the Group financial targets for 2017, whilst maintaining our longer term guidance. – António Horta-Osório Lloyds Banking Group plc Group Chief Executive
